Q1. Although the U.S. is one of the richest nations in the world, it is also the world's largest debtor nation. We often hear that the problem is the nation's low savings rate. Suppose policy makers attempt to rectify this by encouraging greater savings in the economy. If their attempts are successful, what effect will this have on real GDP?
Q2. Consider a small open economy with a wide array of trading partners all operating in different currencies. The economy's business cycles are not well synchronized with any of the world's largest economies and policymakers in this country have a well earned reputation for being fiscally prudent and honest. In your view, should this small open economy adopt a fixed exchange rate regime?